“The problem I have with Goldman as opposed to all these other banks is that all the other banks, they were just stupid,” says a hedge fund CEO. “They bought this stuff and they actually believed it. But Goldman knew it was crap.” Indeed, Goldman CFO David Viniar in 2007 boasted that Goldman was covered in the mortgage area because it had shorted the market. “The mortgage sector continues to be challenged,” he said. “As a result, we took significant write-downs on our long inventory positions … However, our risk bias in that market was to be short and that net short position was profitable.”
...more
